Life Sciences Business
Tecan is the market leader and a pioneer in laboratory automation. Tecan has offered a wide range of laboratory instruments and automated workflow solutions for use by pharmaceutical and biotechnology companies, government research institutions and universities, diagnostic laboratories, and scientists from numerous applied markets for 40 years. In 2020, the Life Sciences Business segment represented 56% of total sales of the Tecan Group.
SALES OF THIRD PARTIES
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(CHF million)
LIFE SCIENCES BUSINESS(in % of sales)
- Sales to third parties + intersegment sales
Sales in the Life Sciences Business segment grew strongly by 13.2% to CHF 408.8 million in fiscal year 2020 (2019: CHF 361.2 million). This equates to a rise of 18.7% in local currencies. The Life Sciences Business experienced strong demand for products supporting the COVID-19 response, mainly liquid handling and automation workstations as well as the associated disposable pipette tips.
Despite the strong increase in sales, parts of the Life Sciences Business also experienced significant disruption as customer facilities were closed or access was restricted to slow the spread of COVID-19. Product groups adversely impacted included detection instruments, research reagents for next-generation sequencing (NGS) and consumables for mass spectrometry sample preparation.
Sales growth accelerated further in the second half of the year, with sales increasing by 26.2% in local currencies.
Order entry in the Life Sciences Business outpaced recognized revenues significantly in the fiscal year 2020, with order backlog increasing at a high double-digit rate.
Reported operating profit in this segment (earnings before interest and taxes; EBIT) rose to CHF 78.2 million (2019: CHF 56.7 million). The operating profit margin increased to 17.4% of sales (2019: 15.1%). This positive performance is primarily a result of sales growth as well as a strong margin contribution from the consumables business.
HIGHLIGHTS OF 2020
- Supporting customers in research, therapeutic and vaccine development and with the scale-up of COVID-19 diagnostic testing
- Launch of DreamPrep™ NAP, an integrated, fully automated solution simplifying nucleic acid extraction workflows for many genomic applications
- Successful development of new instrument platforms and launch of new reagents in key applications
MARKETS AND ORGANIZATION
In the Life Sciences Business segment, Tecan distributes its branded products through its own market organization and distributors in more than 70 countries worldwide. Sales and application specialists communicate with end customers to discuss their various requirements in terms of automating highly diverse laboratory procedures, while service engineers as well as a help desk and expert-line specialists work to ensure a high degree of customer loyalty and satisfaction.
Most of these customers work in the field of life science research and applied markets. Over one-third of sales in this segment are usually generated from customers in the diagnostics market, for example large reference labs. During 2020, with substantially increased COVID-19 clinical testing and high customer demand associated with the global pandemic, this share has increased substantially. Customers in the fields of research and diagnostics place various requirements on products and the sales process. The diagnostics market is strictly regulated by national supervisory authorities, and each automation solution is used within a clearly defined area of application. Product features such as instrument reliability, quality and reproducibility of test results as well as user-friendliness are extremely important. And in the area of research, highly innovative, more flexible and user-friendly automation solutions continue to play a key role. The local sales organizations take into account the various needs and requirements of both customer groups.
Key application areas for the Life Sciences Business are:
- Protein analysis, particularly workflows of mass spectrometry
- Cell and tissue analysis
These three applications are generally used in life science research as well as in regulated settings.
Within the Life Sciences Business, the largest instrument group is the scalable liquid handling platforms, which are used to pipette fluids with optimum precision and automate laborious and repetitive manual procedures. These platforms can be configured from the wide-ranging portfolio of available modules and devices to provide a high degree of flexibility and easy adaptability for a diverse range of applications. Highly complex customized offerings are also provided to a smaller group of customers. Tecan is the global market leader in automated liquid handling platforms. Tecan also provides a wide range of bioanalytical instruments such as microplate readers and washers, which allow reactions to be monitored or specific analytes to be measured. They are used as independent devices or integrated within the liquid handling workstations to ensure a complete customer solution. Tecan also works with numerous partner companies to integrate their test procedures or devices to provide comprehensive workflow solutions. Tecan’s offering includes instruments, special software packages and application expertise as well as consulting, service and consumables.
In the three core application areas, Tecan increasingly offers complete solutions, i.e. not only instruments but also selected reagents and functional consumables.
The corporate strategy pursues three vectors to ensure sustainable, profitable growth. Tecan’s specific strategies allow it to drive forward customer projects with the respective business models of the two business segments.
EXPANDING THE CORE BUSINESS
In Life Sciences Business the market leading position will be further increased and market share gained through launching new products and expanding geographically.
NEW INNOVATIVE INSTRUMENT PLATFORMS
A continuous stream of innovations and market launches of new instrument platforms and variants thereof set the basis for future growth on the instrument side as well as for recurring revenues generated from services, consumables and reagents.
LABORATORY AUTOMATION WORKSTATIONS
The Fluent Laboratory Automation Workstation is the highest performance platform within Tecan’s extensive portfolio of liquid handling solutions for laboratory automation. Fluent is a unique automation concept that provides high precision, superior throughput and extended walkaway time. Employees in the laboratory can get more done, with greater confidence in the results. It is available in three sizes to suit the throughput requirements of almost any laboratory. Fluent was developed around the application-specific needs of laboratories. In recent years, Tecan continuously launched new Fluent solutions on the market that target specific applications. For example, these solutions address the need for automation in the rapidly growing cell biology market, in compound management, in the area of genomics as well as in numerous other fields of application.
The platform’s intuitive FluentControl™ software and built-in touchscreen interface simplify day-to-day activities by guiding scientists through routine set-up and operation of the system for consistent, reproducible operation.
The Fluent Gx platform variant was developed for the automation of laboratory workflows in regulated markets. Here Fluent can be used for applications such as high throughput nucleic acid purification, quantification and normalization or as a scalable solution for PCR amplification. In the US, it is registered as a Class I medical device.
In year under review, Tecan has successfully concluded the development of the Fluent® Mix and Pierce Workstation to provide end-to-end automation for whole blood pipetting in clinical environments. This newly developed instrument configuration was launched at the beginning of 2021 and is intended to standardize pre-analytical sample handling and mixing. It is part of an ongoing collaboration with QIAGEN N.V. to optimize sample preparation for latent tuberculosis (TB) testing with the QuantiFERON-TB Gold Plus assay. Newly developed Tecan Piercing Tips™ allow to aliquot whole blood samples directly from vacuum blood collection tubes or septum-capped tubes – without the need for manual lid removal. This reduces the risk of laboratory staff coming into contact with infectious materials, and saves valuable time when performing tube-to-tube or tube-to-plate transfers and whole blood assays. The workstation also features the newly developed Tecan Tube Rotator™ – which provides 360-degree tube mixing to maintain whole blood samples in suspension without hemolysis.
In addition, Tecan, through its Partnering Business, is the partner of choice in automation systems for many companies in the in-vitro diagnostics industry. With the availability of Fluent Gx, customers in regulated markets are also able to benefit from the high level of productivity and performance offered by Fluent platforms.
Tecan offers a range of bioanalytic instruments. The Spark multimode microplate reader is a new generation of reader platform designed to offer greater flexibility and increased productivity for cell biology and genomics customers. The platform delivers a combination of exceptional capabilities and ease of use to simplify routine laboratory tasks. In the core of the instrument, a unique optics module was developed that ensures that laboratories no longer have to make a trade-off between flexibility and sensitivity. Integrated capabilities for cell counting and incubation simplify cell biology protocols, while ultra-fast scanning – in under five seconds – allows for rapid application analysis in the field of genomics. The special fusion optics function provides a unique sensitivity, speed and flexibility. Other options include the Te-Cool™ cooling module. This module makes it possible to set the temperature of the measuring chamber lower than the room temperature and thereby achieve exact and reliable results. Automated cell imaging and confluence measurement allows cell cultures to be incubated and monitored in the measuring chamber.
With its additional imaging capabilities, the new Spark® Cyto reader platform enables life science research laboratories to track the development of cells in real time over an extended period, with complete control of all environmental parameters. Another special feature of this innovative instrument is that measurements can be carried out automatically for predefined events and further processes automated on the basis of the evaluated image data, such as the addition of chemical substances, which influence cell behavior or survival.
In order to also provide research laboratories with a more cost-effective entry into state-of-the-art reader technology, Tecan offers the highly popular Infinite® 200 PRO series of multimode microplate readers. This proven, reliable reader platform has already been cited in more than 1,800 scientific publications and enjoys great popularity across the world.
Beyond the Ordinary – TECAN LABWERX
The speed of change is high in life science research, frequently outpacing the lab industry’s development of standard product. Tecan Labwerx creates custom solutions to address the ever-changing needs of the market. At Tecan, automation and robotic systems integration is in the Company’s DNA. Tecan’s multidisciplinary team of life scientists, engineers and software experts has been creating custom automation solutions for over 20 years, delivering over 1,000 projects – from simple modified workstations to large-scale robotic integrations.
There may not be a readily integrated automation platform that meets the unique needs of new and evolving workflows in a laboratory or manufacturing facility. Innovation in automation instrumentation happens on its own timeline that may not match the unique needs of brand-new biotechnology. With its customizing capabilities, Tecan Labwerx can deliver solutions beyond the ordinary, which was an important contributor to sales and order growth in the year under review.
INCREASING PRODUCTIVITY WITH NEW DIGITAL TOOLS
Modern laboratory automation increases sample throughput in a laboratory, minimizes human error, enhances precision, delivers reproducible test results, documents these results and thus improves productivity as a whole. However, in today’s busy labs, mission-critical decisions about laboratory equipment purchases, service contract renewals, consumables spending, and staffing are often made on the basis of incomplete information.
Why did a particular instrument run fail? Why are some protocols less efficient than others – or have more workflow errors? Why do similar tasks take longer to complete at different times of the day, or on different days of the week? To optimize instrument uptime and increase throughput, labs need to get to the root of such questions and identify underlying causes. Historical instrument usage patterns may highlight capacity gaps, helping to deploy resources more effectively, and improve troubleshooting.
To help laboratories to increase their productivity with unparalleled insights, Tecan offers Introspect™. Introspect is an easy and secure cloud-based reporting and analysis service. Data from connected automation workstations are displayed on intuitive dashboards with real data on instrument uptime, consumables consumption and run success rates. Introspect completely replaces manually maintained spreadsheets, it automatically gathers instrument runtime, consumables usage, error rates and more, directly from Freedom EVO® or Fluent systems. Even historical and archived instrument data can be uploaded which allows a lab manager to study past data to make informed decisions possible for the future.
These capabilities proved to be essential for large testing facilities during the coronavirus pandemic to keep their fleets of PCR systems running at maximum capacity.
EXPANDING PRESENCE IN GLOBAL GROWTH MARKETS
Many countries are currently investing considerable amounts in healthcare and life science research. Tecan is focusing in particular on expanding its business in China, which is already one of the world’s largest healthcare markets, even though the country’s spending per capita is still only a fraction of that in many western industrialized countries. Continuing economic growth combined with rising spending per capita make this an extremely attractive market. Tecan has already been active in China for a number of years, and since 2008 through its own subsidiary. In 2020, growth in China outpaced that of the Asia region as a whole, bringing the total business in China to over CHF 80 million in the year.
In China, laboratories in the largest hospitals use Tecan platforms to test blood samples for infectious diseases, for instance. The number of the largest hospitals is constantly growing, along with patient numbers and utilization. The corresponding rise in diagnostic test volumes is increasing the need for efficient automation.
Large investments are also being made in laboratory infrastructure in the area of academic or biopharma research.
In order to exploit the various end markets in China, Tecan is continuing to invest heavily in expanding its marketing and service organization. From a headcount perspective, China already is the second largest local organization for Tecan. A larger direct market presence should lead to a further significant increase in sales in China in the coming years.
BUILDING UP FURTHER PILLARS IN THE INSTRUMENT MARKET
Tecan is aiming to build up further pillars in the instrument market for life science research. This applies in particular to areas beyond conventional, open and flexible robotics solutions for liquid hand¬ling and microplate readers. There are plenty of opportunities here, especially in dedicated instruments for sample preparation. In adjacent markets, Tecan sees opportunities to extend its traditional core business so as to grow faster than the overall markets for life science research instruments. This potential can be accessed both organically and through acquisitions. For example, since an acquisition in 2016 Tecan can offer dedicated instruments in the area of sample preparation for mass spectrometry, which are increasingly being used for automated solid phase extraction. Automated solid phase extraction with positive pressure workstations offers many advantages compared with conventional vacuum-based purification. Ultimately, better-purified samples can produce higher-quality analytical results that, thanks to automation, are not dependent on the individual user. To enable all process steps of a workflow to be automated, it is also possible to integrate the Resolvex A200 positive pressure workstation in Tecan’s liquid handling workstations.
Also in other application areas like genomics, Tecan is developing new dedicated workstations to fully automate specific workflows. Shortly after the acquisition of Tecan Genomics in September 2018 ( formerly NuGEN Technologies), Tecan launched the DreamPrep NGS, a fully-automated approach to next-generation sequencing (NGS) library preparation for research use. This groundbreaking new approach offers quality controlled, sequencing-ready NGS libraries in just a matter of hours, with minimal manual interaction and no sample loss. DreamPrep NGS is a full walkaway solution that combines the Tecan Fluent liquid handler and Infinite plate reader, together with DNA and RNA library preparation kits. The use of this innovative solution can help double the typical sample throughput in a laboratory.
In the year under review, the offering of dedicated workstations was expanded early 2020 with the launch of the DreamPrep NAP to further drive the comprehensive genomics strategy. DreamPrep™ NAP is an integrated, fully automated solution simplifying nucleic acid extraction workflows for many genomic applications. It combines the high productivity and precision of the Fluent automation platform with a Tecan reader for integrated quantitation and normalization. During 2020, the DreamPrep NAP also helped labs quickly and effectively scale up COVID-19 testing to accommodate larger test volumes.
EXPANSION OF RECURRING SALES
The third vector focuses on expanding recurring revenues in Tecan’s two main markets, life science research and in-vitro diagnostics. Traditionally, Tecan participates in the aftermarket with consumables as well as service and spare parts. Since several years, the Company also supplies reagents and functional consumables for select applications so as to be able to offer fully integrated solutions as well.
In 2020, the disposable pipette tip business saw a substantial increase in demand due to COVID-19 testing. As a result, overall recurring sales of services, consumables and reagents in the Life Sciences Business amounted to about 55% of total segment sales in 2020.
EVOLUTION INTO A SOLUTIONS BUSINESS
As part of the company’s strategy, Tecan is increasingly seeking to provide comprehensive solutions in the areas of specialty diagnostics and life science research as part of the Life Sciences Business, including the reagents or functional consumables used during specific applications. This range of solutions open up new markets for Tecan, without competing with the typical in-vitro diagnostic customers in Tecan’s Partnering Business.
Tecan made the first step in this direction with the acquisition of IBL International in 2014. This enables Tecan to leverage its automation expertise and leading position within the immunoassay market for open instrumentation platforms and combine dedicated instruments with one of the widest ranges of microtiter plate-based immunoassays for specialty diagnostics.
The product portfolio comprises enzyme, radio and luminescence immunoassays for research and clinical laboratories, including a large selection of specialty assays for endocrinology (hormone measurement), neurodegeneration (e.g. Alzheimer’s disease), neonatal screening and assessing steroid hormones in saliva.
With the acquisition of the US-based SPEware Corporation (Tecan SP), Tecan expanded its offer of dedicated total solutions to sample preparation solutions for mass spectrometry.
The separation of a target analyte from a complex sample before it can be introduced into an LC-MS improves the robustness of the assay, and the improved purification of the samples enables longer maintenance intervals. The proprietary, microparticle-filled consumables for enrichment of a substance for the solid phase extraction offer significant advantages, including higher selectivity, reproducible separation and improved data quality.
In September 2018, Tecan successfully closed the acquisition of NuGEN Technologies (now Tecan Genomics) to further expand the Company’s dedicated solutions offering into the new market segment of next-generation sequencing (NGS). The business now benefits from Tecan’s global presence, customer base and strong position serving the market with automation platforms optimized for NGS sample preparation.
Tecan now provides innovative genomic sample preparation for NGS and microarrays for a broad range of sample types including RNA and DNA from whole tissues, preserved and prepared tissue samples (FFPE, Formalin-Fixed Paraffin-Embedded), single cells and liquid biopsies such as from blood samples. Next-generation sequencing technologies are currently transforming the life sciences, e.g. the field of cancer research, due to the wealth of genetic information obtained.
NGS workflows are composed of multiple complex steps, several of which need to be performed prior to loading samples in the actual sequencer. The most critical step prior to sequencing is the so called library preparation, in which many samples are processed in parallel and its correct performance is key to match the individual DNA sequences with the respective samples again after sequencing. The quality of prepared libraries has a significant impact on the sequencing process, the reproducibility and usability of the data and thereby ultimately on the overall data quality. With large numbers of samples being processed, library preparation can actually cost more than the sequencing itself.
Costs associated with NGS overall are dropping, making the technology more affordable and widely accessible. A higher adoption of NGS and fast growing sample numbers increase the need for automation, a particular strength of Tecan, especially in the genomics area. With automation, labs can increase the throughput and eliminate unnecessary manual steps and sources of error.